Dell is selling AMD chips. But why?

The Round Rock, Texas-based computer maker is offering six Athlon 64 chips on its Web site. The chips are individually packaged for retail sale. Speeds range from 2.0 GHz and 2.8 GHz and prices from $219.27 for the Athlon 3500+ to $1,102.91 for an Athlon 57-FX.

Dell is not selling any of AMD's other chips, such as the Opteron processor for servers or the Turion for laptops.

So why suddenly can you find AMD Athlon processors on the Dell Web site? For the same reason the chips are sold individually in other retail outlets, responds Dell: customer demand.

Still, AMD chips are not yet available inside Dell PCs.

"Dell is constantly evaluating new technologies and at the present time, we don’t have AMD processor-based systems in our portfolio," said Dell spokesman Bruce Anderson.

Dell is the only major North American PC maker to exclusively use Intel processors. Consumer product lines from other companies, including Hewlett-Packard, Gateway, Lenovo and IBM, offer both Intel and AMD chips.

CNET Forum readers spotted the processors for sale last week, although responses were lackluster considering Dell is offering only packaged AMD processors and not installing them in PCs, laptops or servers.

Dell's industry status and historic devotion to Intel would make any potential move to AMD chips a significant shift. In the past, founder Michael Dell has blasted AMD's Athlon processor as an unproven computing platform. And CEO Kevin Rollins has waffled on the "Dell on AMD" issue more than once.

Dell first tested the waters in 2001 through a survey asking customers if they would consider AMD's Athlon and Duron processors, Intel's Celeron, Pentium III and Pentium 4 processors, and also PowerPC processors.

But these are desperate times in the PC business, and Dell could be looking for a way to bring new customers into the fold by offering lower prices. Dell, which said it will report its third-quarter earnings on Thursday, said last week that its revenue will fall well short of expectations due to sluggish U.S. and U.K. consumer sales.

Meanwhile, computers carrying AMD chips are gaining market share in retail outlets. Desktop computers and notebooks with AMD chips accounted for 49.8 percent of PCs sold in domestic stores in October, compared with Intel's 48.5 percent of the market, according to a report published on Tuesday by research firm Current Analysis.

So why is Dell selling only individual AMD chips and not a Dell Dimension with "AMD Inside"? Because, says independent analyst Roger Kay, Dell is still selling to its original demographic: PC gaming enthusiasts.

"Obviously, you can't put one of these processors in an existing Dell machine. AMD and Intel motherboards are not compatible," Kay said. "Dell is selling these to consumers who may have everything that they need at the moment except the processor.

Dell's sale of wrapped AMD chips is also significant because the company does not typically offer individual PC components, such motherboards or fans.

"Is this the first step in bringing in AMD systems to the Dell market?" Kay asked rhetorically. That will depend on how much Dell succumbs to customer pressure, he then speculated.

While AMD provides discounts on bulk purchases, Dell's AMD chip prices are on average about $10 to $80 more expensive than Sunnyvale, Calif.-based AMD lists its chips on its own Web site.